Judge blocks Key­stone XL pipe­line over the lack of en­vi­ron­men­tal re­views.

Pres­i­dent’s agenda of ‘en­ergy dom­i­nance’ slowed by de­ci­sion to block pipe­line

San Antonio Express-News - - FRONT PAGE - By James Os­borne

WASH­ING­TON — Pres­i­dent Don­ald Trump’s cam­paign to es­tab­lish U.S. “en­ergy dom­i­nance” was struck a blow af­ter a fed­eral judge in Mon­tana blocked the con­struc­tion of the Key­stone XL pipe­line.

U.S. District Judge Brian Mor­ris ruled late Thurs­day the Trump ad­min­is­tra­tion had failed to con­duct nec­es­sary en­vi­ron­men­tal re­views, putting into ques­tion a project that had gal­va­nized the en­vi­ron­men­tal move­ment and which Pres­i­dent Don­ald Trump made a cor­ner­stone of his pres­i­den­tial cam­paign.

Over al­most two years in of­fice, Trump has steadily rolled back one Obama-era pol­icy af­ter an­other in a push to ex­pand oil and gas pro­duc­tion, draw­ing crit-

icism from many in­side and out­side Wash­ing­ton that he was not mov­ing care­fully enough in a sys­tem de­signed to limit pol­icy changes from one ad­min­is­tra­tion to the next. The ad­min­is­tra­tion’s de­ci­sion on Key­stone came four days af­ter Trump took of­fice.

“They wanted a quick re­ver­sal be­cause that’s what Trump wanted,” said Vic­tor Flatt, a law pro­fes­sor at the Univer­sity of Hous­ton. “But it doesn’t work when you don’t fol­low the law.”

In 2015, af­ter nearly seven years of re­view, the Obama ad­min­is­tra­tion re­jected Cana­dian de­vel­oper Tran­sCanada’s ap­pli­ca­tion to build an 1,100 mile pipe­line from Al­berta’s oil sands fields into the United States on the grounds it would in­crease green­house gas emis­sions and hurt U.S. lead­er­ship in cli­mate change.

In his rul­ing, Mor­ris said the Trump ad­min­is­tra­tion had failed to pro­vide ev­i­dence show­ing the pipe­line would not con­trib­ute cli­mate change or that it pre­sented an eco­nomic ad­vanatge at a time U.S. oil pro­duc­tion is boom­ing through the shale drilling revo­lu­tion.

Out­side the White House Fri­day, Trump sug­gested the gov­ern­ment would ap­peal Mor­ris’ rul­ing in the

9th Cir­cuit Court of Ap­peals in San Fran­cisco.

“Ev­ery­thing ends up in the 9th Cir­cuit,” he said, with Ma­rine One idling in the back­ground. “It was a po­lit­i­cal de­ci­sion made by the judge. I think it’s a dis­grace.”

Tran­sCanada did not re­spond to a re­quest for com­ment.

The de­ci­sion comes as a blow to an oil sec­tor that has found build­ing new pipe­lines in­creas­ingly dif­fi­cult amid steady flow of lit­i­ga­tion from en­vi­ron­men­tal groups.

Robin Rorick, a vice pres­i­dent at the Amer­i­can Petroleum In­sti­tute, said pipe­lines like Key­stone “are the back­bone of our na­tion’s en­ergy in­fra­struc­ture and one of the most en­vi­ron­men­tally sound ways to trans­port the fuel and petroleum prod­ucts that power Amer­ica ev­ery sin­gle day,” said .

The Trump ad­min­is­tra­tion now faces the prospect of wait­ing out the ap­pel­late process or re­do­ing the en­vi­ron­men­tal re­view for Key­stone, pro­cesses that could both po­ten­tially take years.

“An ap­peal of this or­der will likely go to the 9th Cir­cuit, which has not been fa­vor­able ground for the Trump ad­min­is­tra­tion,” Fred Jauss, a Wash­ing­ton­based at­tor­ney at Dorsey & Whit­ney, said in an email. “A lengthy ap­pel­late process could de­lay Tran­sCanada’s goal of com­menc­ing

con­struc­tion in 2019.”

In the mean­time, it’s un­clear whether the pipe­line, which could de­liver more than 800,000 bar­rels of crude a day to Texas re­finer­ies, still makes eco­nomic sense to­day.

Tran­sCanada first filed the ap­pli­ca­tion for the $5.2 bil­lion Key­stone XL in 2008, when oil prices were over $100 a bar­rel. With West Texas In­ter­me­di­ate now trad­ing at close to $60

a bar­rel, oil com­pa­nies are al­ready scal­ing back ma­jor capi­tol projects.

Crude set­tled at $60.19 a bar­rel Fri­day in New York.

Tran­sCanada has yet to is­sue its fi­nal de­ci­sion on build­ing the last leg of the pipe­line, which would run from Al­berta to Steele City, Neb. A pipe­line run­ning from Ne­braska to re­finer­ies on the Texas Gulf Coast has al­ready been con­structed.

For now, there re­mains enough de­mand for Cana­dian crude in the U.S. for the pipe­line to ul­ti­mately go ahead, said Zachary Rogers, an en­ergy an­a­lyst at Wood Macken­zie.

“While def­i­nitely a ma­jor set­back in terms of tim­ing, this is un­likely to be the nail in the cof­fin for Key­stone XL,” he said.

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